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Sept. 26 --A Sept. 17 hearing in front of the House
Subcommittee on Courts, Intellectual Property, and the Internet “brings an
important part of the Committee's review of copyright law full circle,”
chairman of the full Judiciary Committee Rep. Robert W. Goodlatte (R-Va.) said
in a prepared written statement.

• March
4, 2013--Copyright Register Maria Pallante gave a presentation at Columbia Law
School in which she called for “The Next Great Copyright Act.”

• March
20--Pallante testified before the House IP subcommittee and urged congress to
begin thinking about comprehensive copyright reform .

• April
24--Rep. Robert Goodlatte (R-Va.) announced that the House Judiciary Committee
would take an in-depth look at U.S. copyright laws.

• May
16--Hearing held to examine how diverse stakeholders with starkly different
viewpoints can work together in a productive manner to address polarizing
copyright issues .

• July
25--Hearing held to hear from various content owners on the role that copyrights
play in incentivizing innovation.

• Aug.
1-- Hearing held to hear from people in the technology industry about how their
work encourages innovation.

• Sept.
17--Hearing held on the impact voluntary agreements have had on combating
online infringement.

The hearing focused on the role of
voluntary industry agreements in curbing online copyright infringement and
Goodlatte's “full circle” remark was in reference to the fact that during the
committee's first hearing on copyright reform in March lawmakers heard from the
Copyright Register about the importance of voluntary agreements.

For the
most part, the first phase of Goodlatte's promised review of copyright law
focused generally on broad, overarching themes of copyright. “In the
Committee's next phase of copyright review hearings, we will take a more
issue-by-issue approach,” Goodlatte said in his statement.

Bloomberg BNA
contacted a number of stakeholders for a review of Goodlatte's efforts, and for
a discussion of what to expect in the coming months. Most expect the next stage
to be more contentious than the process has been to date. But they are
nonetheless impressed that Goodlatte has managed to move the debate forward as
far as he has, especially given the acrimony surrounding copyright legislation
as recently as 2012.

“Overall we have a fairly encouraging picture as we
head into the next phase of hearings,” Sandra Aistars of the Copyright Alliance
told Bloomberg BNA.

112th Congress Unable to Move Beyond SOPA

The heated debate surrounding the House's Stop Online Piracy Act and the
Senate's Protect IP Act, which were designed to reached offshore “rogue
websites” that host infringing content, led to both bills being shelved . An
“Internet Blackout Day,” held just days before Congress abandoned its efforts
to pass the legislation, resulted in thousands of websites shutting down to
protest certain provisions in the bills . Additionally, rhetoric on both sides
of the debate was intense as proponents of the legislation were accused of
trying to “kill the internet” while opponents of the measures were accused of
protecting infringers.

Sponsors of both bills tried to mollify critics
by stripping out the most objectionable provision--a requirement that rogue
sites be blocked at the Domain Name System level. “But at that point it was too
late, the discussion had gotten to such a heated level that there was little
attention paid to what the bill actually said,” Aistars said during a March
2012 panel discussion at an American Bar Association event in Arlington,
Va.

Aistars and other panelists predicted that the 112th Congress was
unlikely to risk another showdown on the issue given the upcoming elections.
Indeed, Congress for the most part steered clear of the hot button issue,
introducing no substantial copyright legislation for the remainder of the
year.

Then in 2013 the issue of new copyright legislation was first
raised in earnest not by a lawmaker but by Copyright Register Maria
Pallante.

Pallante's Call for Reform

On March 4, Pallante gave a
presentation at Columbia Law School in New York titled “The Next Great
Copyright Act.” In her presentation, Pallante called for “comprehensive review
and revision of U.S. copyright law.” Pallante identified a number of issues
that were in desperate need of attention, including:

• orphan
works;

• public
performance rights for sound recordings;

• exclusive
rights;

• incidental
copies;

• enforcement;

• the
Digital Millennium Copyright Act;

• digital
first sale;

• exceptions
and limitations; and

• licensing.

Some Issues 'Ripe for Resolution'

Pallante then testified
before the House IP subcommittee on March 20 and she told lawmakers that some
issues are particularly “ripe for resolution” because they have been studied
extensively either by Congress directly, or by the Copyright Office in response
to lawmakers' requests

“For example, Congress already has had more than
a decade of debate on the public performance right for sound recordings, and
has given serious consideration to improving the way in which musical works are
licensed in the marketplace,” she said.

In her written remarks, she also
noted that, among other things, her office has issued reports on, or is in the
process of studying orphan works , the first sale doctrine, the federalization
of pre-1972 sound recordings , mass digitalization of books and the potential
creation of a small claims process.

When asked during the March 20
hearing to narrow the “ripe” issues down to just three topics, Pallante
identified the following: public performance rights, orphan works, and getting
rid of the distinctions in the criminal penalties for streaming (currently a
misdemeanor) and illegal downloading (a felony).

These are the most
important issues, but Pallante urged Congress to put everything on the table.
All of these issues are intertwined, and much of the law is in dire need of
being either updated or revised, Pallante said. The process, however, will not
be easy, she warned.

Goodlatte Vows Review of Copyright Law

Goodlatte, who took the helm of the full Judiciary Committee when the 113th
Congress convened, well understood the difficulties that would arise in any
effort to undertake the sort of revision that Pallante advocated.

“Clearly, the Register's call to revise, rather than update, the Copyright
Act is one that is certain to hearten some and, quite frankly, scare others,”
Goodlatte said during the March 20 hearing. “However, my views on the merits,
or lack thereof, of a major overhaul depend not upon the scale of the effort
required, but upon the merits of doing so.”

A little over a month later,
during a World Intellectual Property Day event on April 24, Goodlatte pledged that the Judiciary Committee would “hold a
comprehensive series of hearings on U.S. copyright law in the months
ahead.”

Early Hearings Show Inclusive Approach

Held in May, the
first hearing brought together a number of witnesses who had taken part in the
Copyright Principles Project, which was a group of participants with varying
backgrounds that in 2010 released a report identifying 25 “meaningful reforms”
that it claimed were needed to reform U.S. copyright law .

During that
hearing, the lawmakers were more interested in the CPP's ability to reach
consensus on a number of contentious issues than they were in the actual
recommendations made in the report. They were told by the witnesses to avoid
using polarizing language and to focus on the benefits that copyright brings to
a wide array of stakeholders.

“The first hearing demonstrated that there
is room for consensus on some of these issues,” Sherwin Siy, vice president for
legal affairs at Public Knowledge, told Bloomberg BNA. Public Knowledge
strongly opposed SOPA and the Protect IP Act, but Siy said Goodlatte seems to
be trying to avoid some of the pitfalls that doomed those bills. Bringing in
members from the CPP was a good starting point, Siy said, because the CPP
“shows that it is possible to have this conversation.”

Another benefit
of starting with a focus on the CPP, Siy said, is that it addresses two
complaints that were raised with respect to the rogue website legislation. The
process that preceded the introduction of those bills was criticized both for
lacking transparency and for tending to focus only on the needs of the content
community.

“It should be possible to avoid that if you have a process
that actually does try to account for all sides and for general public
sentiment,” Siy said.

The Consumer Electronic Association was another
opponent of the rogue website bills. When the debate was still raging in late
2011, Michael Petricone, CEA's senior vice president of government and
regulatory affairs, said that it was obvious, from the text of the bills, that
the technology community had not been consulted .

Petricone told
Bloomberg BNA that Goodlatte is doing a good job of not repeating those
mistakes.

“[Goodlatte] has reached out broadly to the big content
companies, artists, the innovation community, and other stakeholders,”
Petricone said. “We greatly appreciate his rigor, his inclusiveness, and his
desire not to move forward hastily on a complex issue critical to our
innovation future.”

The next two hearings, held in late July and early
August, demonstrated Goodlatte's commitment to include a diverse set of
stakeholders. On July 25, the IP subcommittee heard testimony from content
owners who extolled the economic benefits of copyright .

A few days
later, it was the technology sector's turn . The Aug. 1 hearing, however,
deviated slightly from the previous two hearings in that copyright reform went
largely unmentioned. When it was brought up, it was in the context of lawmakers
asking witnesses--representing various technology startup companies--whether
their business models were impeded by current copyright laws.

“The one
thing that came through [from the Aug. 1 hearing] is that there are no major
gaps in copyright laws that are preventing people from launching new business
models,” Aistars told Bloomberg BNA. Aistars noted that the witnesses
identified patent law as being of greater concern than copyright law when it
comes to stifling innovation. “It is encouraging that there do not seem to be
any major problems that need to be addressed to let people continue to
innovate,” she said.

Following the Money

It would be far easier
to cut off the funding to rogue websites than it would be to disable the
websites at the DNS level, opponents of SOPA and the Protect IP Act argued.
Rather than focusing on how search engines could block access to infringing
sites, lawmakers should instead put pressure on payment processing networks to
get them to cease doing business with known infringers, a Google representative
said during a November 2011 House Judiciary Committee hearing on SOPA .

The IP committee's Sept. 17 hearing was held to discuss a number of
voluntary agreements that have been forged since the demise of the rogue
website bills. Many of those agreements incorporate a follow-the-money approach
whereby payment processors agree to stop doing business with websites that are
found to either traffic in counterfeit goods or contain infringing content.
However, witnesses said that it was too early to determine the effectiveness of
those agreements.

Relying exclusively on either a follow-the-money
approach or solely on voluntary agreements also does not fully address the
problem of online infringement, witnesses at the Sept. 17 hearing said. For
instance, Cary Sherman, executive director of the Recording Industry
Association of America, said that neither remedy has proven effective at
lessening a content owner's burden under the Digital Millennium Copyright Act.
That burden, Sherman said, has been placed on content owners by misguided
judicial interpretations of Section 512(c) of the DMCA, 17 U.S.C. § 512(c).

Section 512(c) states that an internet service provider is only obligated to
remove infringing content after it has been made aware of the infringing
material by the rights holder. Content owners have argued that an ISP should
remove both the infringing item that is identified in a takedown notice and all
other unauthorized items that are identical to that file. Content owners also
maintain that ISPs should also be able to prevent the infringing file from
being uploaded to its servers after it has been removed. Courts have routinely
rejected this theory, holding that the DMCA placed the onus to monitor for
copyright infringement squarely on the shoulders of the content owners.

Sherman said that a resolution of what he sees as a broken notice and
takedown system will either need to come through direct negotiations with ISPs
such as Google, or through government intervention.

“We ought to be able
to sit down together and work out practical solutions to make sure that the
intent of the DMCA is carried out,” Sherman said during the hearing.

Aistars and Siy both told Bloomberg BNA that the DMCA was likely to be one
of the more contentious issues going forward. Aistars said rights holders are
frustrated by “the repetitive battle” to keep their content from being
distributed on pirate sites. Siy noted that even ISPs, particularly smaller
websites that lack the resources to verify all takedown requests, are
frustrated with some of the ways in which Section 512 has been implemented.

Of far greater concern to Siy, however, is revision of another DMCA
provision: Section 1201(a). That provision is at the heart of the recent battle
over a consumer's right to unlock his mobile phone. Section 1201 should receive
attention “given how much these issues matter to consumers,” Siy said.

What's Next?

“Some of these future hearings will focus on specific
issues while others will cover broader topics such as the scope of copyright
protection and fair use, music licensing, and online infringement issues,”
Goodlatte said in his Sept. 17 statement.

Stakeholders for the most part
seemed pleased with Goodlatte's approach so far.

Petricone complimented
Goodlatte's “methodical, lawyerly approach to lawmaking. He appears to be in
the data gathering phase, and is not yet ready to move forward on specific
solutions,” Petricone said.

Importantly, Petricone said that as
Goodlatte gathers information, “he is asking the right questions: how is
copyright working in the digital age? Is it promoting--not
impeding--innovation? Is it fulfilling its constitutional purpose to promote
the progress of the useful arts?”

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